The 10-4 | January 2025

As we kick off the new year, we’re bringing you key industry insights to help you navigate the challenges and opportunities ahead in the freight market. From shifting capacity trends to upcoming industry events, we’ve got everything you need to stay informed and prepared for 2025.

📰 This Edition at a Glance:

• Industry Watch: ILA Strike Averted, Red Sea tensions persist, port efficiency concerns, Trump floats 'External Revenue Service'
• Key Trucking Trends in 2025: Tariff uncertainty, M&A activity, freight market recovery expected.
• ILA-USMX Resolution: A pending deal ensures a pay raise and new safeguards against automation.
• Tender Rejection Rate Hits Three-year High: Capacity tightens, pushing spot market activity upward.
• Tariff Readiness: Proactively assess sourcing, contracts, and timelines to minimize potential impacts.
• TPM25 Countdown: Secure a time to meet with our team on the promenade.
• Supporting Shippers in the New Year: Nationwide solutions to tackle freight challenges in 2025.

Industry Watch

 ⚓ East and Gulf Coast Ports Avoid Potential Strike:

U.S. dockworkers and port employers reached a tentative labor agreement, averting a major strike that could have disrupted trade from Maine to Texas. The deal, which must still be ratified, came after months of tense negotiations involving high-level interventions from the Biden administration. Read more at WSJ.

 🌍 Red Sea Risks Delay Suez Canal Return:

Despite the Israel-Hamas ceasefire, expected to begin Sunday, carriers remain cautious about the Red Sea route due to ongoing Houthi threats, with a potential Suez return delayed until late February. Diversions around Africa have increased transit times, emissions, and port congestion but driven record carrier profits, while Suez toll revenue dropped 60% in 2024. Stability in the region and clear assurances from the Houthis are needed before shipping lines resume Red Sea transits. Read more at JOC.

 📉 Port Congestion Costs and Operational Inefficiency: A study at the Transportation Research Board (TRB) emphasized the staggering costs of inefficiencies in U.S. ports, which result in lost productivity and higher expenses for drayage operators. Addressing issues like outdated infrastructure, labor constraints, and misaligned scheduling is critical to reducing bottlenecks. Read more at FreightWaves.

 🏛️ Trump Announces Plan for External Revenue Service:

President-elect Donald Trump has proposed creating an “External Revenue Service” to collect tariffs, duties, and revenue from foreign sources. The new agency would replace U.S. Customs and Border Protection’s role in tariff collection. Trump says this move is aimed at reducing reliance on domestic taxes. Read more at CNBC.

Key Trucking Trends in 2025

As the trucking industry anticipates a potential upturn in 2025, several key factors are poised to influence market dynamics:

Tariff Uncertainties:

With President-elect Donald Trump set to begin his second term on January 20, 2025, the industry is bracing for potential tariff implementations. Proposed tariffs include a 25% levy on imports from Canada and Mexico, which could significantly impact cross-border trade and supply chains. However, some experts suggest that these proposals may serve as negotiation tactics, potentially leading to more nuanced trade agreements. The incoming administration has promised action on trade policy from day one.

Mergers and Acquisitions (M&A) Activity:

The trucking sector is expected to witness a rebound in M&A activity in 2025. Well-capitalized companies are likely to pursue strategic acquisitions, particularly in specialized service areas, to enhance their market positions ahead of anticipated volume increases. The availability of private equity funds and a more favorable economic environment are expected to drive this consolidation trend.

 Rate Volatility and Market Outlook:

After an extended freight recession, signs are emerging of a potential market recovery. Analysts predict modest contract rate growth, potentially in the low single digits year-over-year. Meaningful changes in the market, however, may not materialize until late 2025. Securing contracts earlier in the year is expected to be a priority for most shippers.

Dockworkers Secure Significant Gains in Six-Year Contract

The International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) have reached an agreement on the final terms of a new master contract, resolving automation-related disputes as the last major sticking point.

Key Provisions of the Agreement:

• Wage Increase: Dockworkers are set to receive a substantial pay raise of nearly 62% over the contract's duration, elevating the top hourly wage from $39 to approximately $63.

• Automation Restrictions: The agreement imposes new limitations on the implementation of automation technologies at ports. While existing semiautomated cranes in ports like New Jersey and Virginia will continue operations, any introduction of new semiautomated equipment mandates the hiring of additional dockworkers. Full automation and the use of artificial intelligence that could replace workers are explicitly prohibited.

Political Influence:

The negotiations drew notable attention from both President Joe Biden and President-elect Donald Trump. Trump publicly opposed port automation, aligning with the union's stance and influencing the trajectory of the talks.

Next Steps:

The tentative agreement now awaits ratification by the ILA's 45,000 members. Until then, dockworkers will continue to operate under the terms of the existing contract, ensuring the uninterrupted flow of goods through these critical ports.

Tender Rejections Rise as Shippers Adapt to Volatile Market

During the 2024 holiday season, tender rejections surpassed 10% for the first time since April 2022, highlighting the challenges in securing trucking capacity. Shippers employed strategic measures to stabilize the market and mitigate disruptions.

 Key Trends:

• Surge in Tender Rejections and Spot Rates: The Outbound Tender Reject Index (OTRI) hit 10%, signaling increased carrier refusals to accept loads. Spot rates also climbed nearly 10% year-over-year, reflecting tightening capacity.

• Extended Lead Times: Shippers provided carriers with an extra half-day of lead time compared to 2019, reducing last-minute capacity challenges.

• Increased Use of Intermodal Transport: Domestic intermodal volumes experienced double-digit growth, with international containers increasingly moving inland, reducing transload and over-the-road trucking utilization. Short-haul demand grew 13% year-over-year, driven by e-commerce and the push for faster deliveries between distribution centers and consumers.

Challenges Ahead:

The freight market remains fragile, with nearly 10,000 motor carriers closing in the first half of 2024. Since peaking in 2022, the industry has shed 33,000 carriers, yet the total number still exceeds pre-COVID levels due to the pandemic-driven boom in freight demand. With the market now flatlining, proactive transportation planning will be essential for shippers to address ongoing uncertainties.

Tariff Readiness: Protecting Your Supply Chain

 As potential new tariffs loom on the horizon, proactive preparation is essential for shippers to minimize disruptions and protect their bottom line. Here’s how to navigate the uncertainty, drawing from insights shared by trade and customs expert Tom Gould :

 Steps to Stay Ahead:

• Evaluate Contracts and Agreements: Ensure contracts clearly define responsibilities for increased duties or quotas. Build flexibility for renegotiation or cancellations if tariffs make performance commercially impracticable.

• Diversify Your Sourcing: Reliance on a single region, like China, increases vulnerability. Explore near-shoring or friend-shoring options to mitigate risks and establish supplier relationships in multiple regions. The evolving China +1 strategy has also been accompanied by a push for reshoring manufacturing to North America. With NAFTA adjustments pending, Mexico has announced plans to better align its trade relationship with the US.

• Monitor Tariff Updates: Establish reliable channels to track tariff changes in real time. Use detailed HTS classification reports to assess the financial impact of duty increases on your imports. Proactively communicate with your customs brokers to stay agile on sourcing and routing adjustments. 

• Prepare for Heightened Enforcement: New tariffs often bring increased U.S. Customs and Border Protection (CBP) scrutiny. Review compliance with HTS codes, country of origin, and customs valuation to avoid penalties. Expect to see more Requests for Information, Notices of actions, and audits, among other enforcement measures.

How We Can Help:

At ContainerPort Group, we’re here to support your logistics strategy through evolving trade policies. From flexible drayage, warehousing, and OTR solutions to real-time updates on regulatory changes, we help you stay ahead of the curve.

Meet with CPG Leadership at TPM25 

The industry's biggest event is almost here, and ContainerPort Group is excited to be a sponsor at TPM25, happening March 2-5. You’ll find our container meeting space on the Promenade Deck, ready to connect and share how our nationwide drayage solutions can simplify your transportation network.

 Our leadership team - including CPG President, Joseph Palmer - will be on site to connect!

📍 Where: Promenade Deck – TPM25, Booth P1

📅 When: March 2-5, 2025

🚛 Supporting Shippers in the New Year

As we move into 2025, staying ahead of shifting freight trends and market changes is more important than ever. Here’s how we’re supporting our customers at every port and rail to navigate what’s ahead:

 Rising Demand on the West Coast:

Late 2024 saw higher spot rates and increased freight activity in key markets like Los Angeles and Seattle, driven by seasonal demand and shifting cargo flows from other regions.

 Stable Capacity Nationwide:

While capacity remains steady across the U.S., we ensure consistent and reliable drayage services to support your supply chain, even during peak periods.

 Looking Ahead:

Spot rates are expected to ease in early 2025, offering opportunities to refine freight strategies. Our team is ready to support you in planning ahead and staying adaptable in a changing market

Industry Events We're Attending

 ➡️ Manifest 2025: Join Denise Hughen and Jackie Csiszar in Las Vegas, February 10-12, 2025. Drop them a note to connect!

 ➡️ RILA - LINK: The Retail Supply Chain Conference: Our parent company, World Group, will be on site in Orlando, February 16-19, 2025.

 ➡️ TPM25 - the premier global ocean container supply chain conference: CPG is a proud sponsor and will be exhibiting on the promenade, booth P1! Drop by and say hello, or click this link to reserve a meeting time with our team.

Thanks for Staying in the Loop!

Thank you for reading this edition of The 10-4—we’re here to help you navigate what’s next in transportation and logistics.